According to Bloomberg Puerto Rico will not be making a payment worth $422mn to its creditors, due at the end on Monday’s business day, and as a result will be going default.
The announcement was made on Sunday in a televised address by the Governor of the island, Alejandro Garcia Padilla, whose government has reportedly resisted the demands of creditors who are asking that they undertake widespread spending cuts in order to create enough surplus to repay their investments.
Governor Garcia Padilla has been warning since last year that the islands $70bn in debt is impossible to pay off and that defaulting on its payments was a “painful decision”, while also understanding that it will likely result in legal action from creditors.
The governor also said that he would have preferred “legal framework to restructure our debts in an orderly manner.”, something which the US Congress had tried and failed to institute due to bilateral opposition.
Puerto Rico is an unincorporated territory of the United States and all 3.5 million of its citizens are technically citizens of the US. However, Puerto Ricans are not able to vote in congressional or presidential elections, despite being subject to the powers of these branches.